Nigerian digital lending pioneer Lidya has officially shut down operations after nearly a decade, marking another significant failure in Africa’s fintech ecosystem. The company, which raised over $16.5 million from prominent investors, cited severe financial distress as the reason for its closure.
What Happened to Lidya?
In October 2025, Lidya sent an email to customers announcing the immediate cessation of all operations. The message was stark and direct: “Despite best efforts to restructure and sustain operations, the Company has encountered severe financial distress and is no longer able to continue in business.”
The shutdown leaves thousands of small business owners in Nigeria uncertain about their funds and loan repayments. More concerning, the company stated it is unable to process refunds or settle claims due to its deteriorating financial condition. The company’s website has been taken offline, its Twitter account suspended, and its LinkedIn page has gone dormant.
The Rise of Lidya: A Fintech Pioneer
Founded in 2016 by Tunde Kehinde and Ercin Eksin, both former executives at e-commerce giant Jumia, Lidya entered Nigeria’s digital lending market with an ambitious vision. The startup aimed to democratize access to credit for small and medium enterprises (SMEs) through technology-driven solutions.
Unlike traditional banks that required collateral, Lidya used sophisticated credit-scoring algorithms and data analytics to assess creditworthiness. This innovative approach made it possible for businesses without physical assets to access working capital quickly and efficiently.
Lidya’s achievements at its peak were impressive:
- Reviewed over $50 billion in credit applications
- Disbursed more than $150 million to 32,000 small businesses
- Built a database of over 100,000 customers
- Raised $16.5 million from top-tier investors including Alitheia Capital, Accion Venture Lab, Flourish Ventures, and Bamboo Capital Partners
Funding History
Lidya’s funding journey appeared promising. The company secured a $1.3 million seed round in 2017, followed by a $6.9 million Series A in 2018. Its largest raise came in 2021 with an $8.3 million pre-Series B round led by Alitheia Capital’s uMunthu Fund. These investments were meant to fuel expansion and solidify Lidya’s position as a leader in African digital lending.
European Expansion: Ambition Meets Reality
In 2020, flush with funding, Lidya made a bold move to expand beyond Africa. The company launched operations in Poland and the Czech Republic, targeting small businesses in Eastern Europe that struggled to access traditional bank financing. Lidya announced ambitious plans to disburse €1 billion ($1.1 billion) over five years in these new markets.
However, this geographic diversification proved costly. Operating expenses ballooned as the company tried to maintain operations across multiple countries and regulatory environments. The European markets, while mature, presented different challenges than Nigeria’s tech-savvy ecosystem. Profitability remained elusive.
By 2023, Lidya quietly exited both European markets, announcing a “renewed focus on Nigeria.” CEO Tunde Kehinde positioned this retreat as strategic, claiming Nigeria’s environment was ideal for the company’s next phase of growth.
The Leadership Crisis That Shook Lidya
Behind the scenes, Lidya was experiencing severe internal turmoil. In 2021, co-founder Ercin Eksin exited the company. While initially described as voluntary, Eksin later revealed publicly that he was forced out by investors who assumed greater control of operations. He has since pursued legal action in the United States over the circumstances of his removal.
This leadership conflict had devastating consequences. Decision-making slowed at a time when the business needed rapid execution. The founder dispute signaled deeper governance issues that would ultimately undermine the company’s stability.
The exodus continued through 2024. Chief Technology Officer Cristiano Machado departed in September 2024, followed by co-founder Tunde Kehinde himself in October 2024. By the end, Lidya operated without any founding leadership as financial pressures intensified.
The Failed Pivot: Lidya Collect
After retreating from Europe, Lidya attempted to reinvent itself with a new product called Lidya Collect. This loan recovery and repayment management platform was designed to help businesses recover debts faster and improve cash flow management.
The pivot came too late and suffered from poor execution. Customers reported widespread problems including frozen funds, failed transactions, and unresponsive customer support. One frustrated business owner stated: “Our money is stuck. Apart from the money that’s locked up, we’ve layered millions of transactions on the platform, and now that it’s failing, we have to recover those debts manually. It’s been a horrible few months.”
These operational failures destroyed customer trust at the worst possible time. As complaints mounted, Lidya’s Portugal-based engineering team disbanded between May and September 2024 after the company failed to meet payroll obligations. The technical infrastructure collapsed just as the product needed the most support.
Why Lidya Failed: A Perfect Storm
Lidya’s collapse resulted from multiple converging factors that created an unsustainable situation:
- Funding Drought
By 2023, the global venture capital market had cooled significantly. Like many African fintechs, Lidya depended heavily on investor funding rather than generating sustainable profits. When fresh capital dried up, the company struggled to service existing debts and maintain operations.
- Unsustainable Growth Strategy
The aggressive expansion into European markets stretched Lidya’s resources thin. The company prioritized growth over profitability, a strategy that works only with continuous access to funding. When capital became scarce, the business model collapsed.
- Governance Breakdown
The forced removal of co-founder Ercin Eksin and subsequent departure of other key executives created a leadership vacuum. Corporate governance issues prevented decisive action when the company needed it most.
- Product Execution Failures
The Lidya Collect product, which was supposed to save the company, suffered from critical technical problems and poor customer service. Instead of generating revenue, it destroyed the remaining customer goodwill.
- Credit Risk Management
Analysts point to mounting credit risks as a contributing factor. In challenging economic conditions with high inflation and interest rates, loan defaults likely increased, straining Lidya’s balance sheet.
Impact on Customers and the Market
Lidya’s shutdown has left many small business owners in financial distress. Customers with funds locked in the platform face uncertainty, with the company explicitly stating it cannot process refunds or settle claims. For SMEs operating on thin margins, these trapped funds represent a significant loss that could impact their operations for months.
The failure also raises questions about regulatory oversight in Nigeria’s fintech sector. The Central Bank of Nigeria is expected to increase scrutiny, particularly regarding client fund protection and crisis management protocols for digital lenders.
Lessons for African Fintech Startups
Lidya’s collapse offers several critical lessons for Africa’s growing fintech ecosystem:
Profitability Over Growth
Sustainable business models must prioritize profitability, not just user acquisition and market expansion. Dependency on continuous funding rounds creates vulnerability to market conditions.
Focus Before Expansion
Geographic expansion should come only after achieving product-market fit and operational excellence in the home market. Lidya’s European adventure diverted resources from strengthening its core Nigerian operations.
Strong Governance Matters
Founder disputes and leadership instability can destroy even well-funded startups. Clear governance structures and conflict resolution mechanisms are essential.
Customer Trust Is Everything
In financial services, customer trust is paramount. Technical failures and poor customer service can accelerate decline when a company is already struggling.
Conclusion
Lidya’s shutdown marks the end of what once seemed like a promising chapter in African fintech. From its founding in 2016 to its peak serving 32,000 businesses, the company demonstrated the potential of technology to democratize access to credit. However, aggressive expansion, governance failures, and an overreliance on external funding ultimately proved fatal.
The collapse serves as a sobering reminder that even well-funded, pioneering startups can fail without sustainable business models and strong operational execution. As Nigeria’s fintech sector continues to evolve, Lidya’s story will stand as a cautionary tale about the dangers of prioritizing growth over profitability and the importance of robust governance.
For investors, customers, and other fintech founders, the message is clear: in the fast-moving world of digital finance, sustainability and sound management matter just as much as innovation and ambition.
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